Japan plans to ramp up renewable energy scheme

TOKYO (Reuters) - Japan's government will propose ramping up a scheme to encourage electricity generation from renewable sources, aiming to cut annual CO2 emissions by 2 percent in 2020.

The growing trend for renewable energy is hitting the amount of electricity power companies supply through regular grid networks, but Tokyo has pledged to cut greenhouse gas emissions by 25 percent from 1990 levels by 2020 and to enhance its national energy security.

Carbon dioxide (CO2) from burning fossil fuels is the main greenhouse gas that scientists say is heating up the planet.

Like many countries in Europe, Japan launched a so-called "feed-in" tariff scheme in November 2009 to make utilities buy electricity from renewable sources at a higher rate, initially starting with surplus electricity of small-volume solar.

But a government advisory panel on Friday approved a set of proposals to make the pilot feed-in tariff scheme into a full-fledged one from the fiscal year starting in April 2012. A split parliament could hamper the passage of the plans, however.

Under the new scheme, power producers will buy all electricity from non-resident solar generators, but just surplus solar electricity from house owners, to encourage energy-saving.

Power producers will also purchase all electricity from wind, biomass, small-scale hydro and geothermal power generators, with the cost of all five types of renewables passed onto their customers evenly around the country.

The new scheme is expected to create a clean-energy around 1 trillion yen ($12 billion) in size, while asking each household to pay 150 to 180 yen extra in monthly electricity bills in 2020, said Takao Kashiwagi, a key panel member and professor at Tokyo Institute of Technology.

Issues to be solved later include measures to ease the extra cost burden on companies with high power bills, such as electric furnace steelmakers and chemical makers, he said.

(Editing by Joseph Radford)